Introduction to Mortgage Servicing Examinations Training - March 2023

Internal Use Only

Corporate Governance

 The board of directors shall establish internal audit requirements that are appropriate for the size, complexity, and risk profile of the servicer.  Internal auditors must be allowed to operate with appropriate independence to provide a reliable evaluation of the servicer’s internal control structure, risk management and governance.  It is critical to review the Board established internal audit requirements and the results of internal audits.

Internal Audits

Internal Use Only

Corporate Governance

 Covered Institutions should receive an external audit, including financial statements, conducted by an independent public accountant annually.  The external audit shall include at a minimum: o Annual financial statements prepared in accordance with GAAP. o Assessment of the internal control structure. o Computation of tangible net worth. o Validation of MSR valuation and reserve methodology, if applicable. o Verification of adequate fidelity and errors and omissions (E&O) insurance. o Testing of controls related to risk management activities, including compliance and stress testing, where applicable.

External Audits